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What should be done with Fannie Mae and Freddie Mac? At an AEI event on Wednesday, housing finance experts joined AEI's Alex Pollock to discuss the fate of these government-sponsored enterprises. Almost everyone agreed that the government's role in the housing market should be reduced by some degree. James Parrot, formerly of the National Economic Council, suggested that we should focus less on where reform should stop -- a topic riddled with complex ideological disagreements -- and instead agree on how to take immediate action to reduce the footprint of Fannie and Freddie.
Mark Calabria of the Cato Institute suggested Freddie and Fannie should be placed into receivership for immediate results. Calabria claimed that in the long run, he supports a shift to a deposit-based mortgage finance system.
David Stevens of the Mortgage Bankers Association recommended creating a single, fungible mortgage-backed security and establishing a structure by which private capital would bear most mortgage credit risk and government involvement would be limited to catastrophic losses. Robert Couch of the Bipartisan Policy Center voiced his commission's support of protecting homeownership and doing something rather than nothing.
AEI's Peter J. Wallison said it would be a mistake to enter into a transition phase without a clear vision of what it would result in. He concluded that the housing market should be predominantly privatized, and that continuing government guarantees would likely create another crisis.
Government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac were once considered the golden twins of housing finance. But they greatly contributed to the US housing bubble and then went humiliatingly broke, with losses of over $240 billion in the ensuing bust.
As wards of the government, Fannie and Freddie became even more dominant in the mortgage market than they had been before. Now, with a near-monopsony in the mortgage markets, they have returned to making profits. Almost everybody agrees that they should neither stay in government conservatorship nor return to their former GSE status. But how do we get off the tiger? Moreover, what should be done with Fannie and Freddie? Our expert panel will explore next steps.
If you are unable to attend, we welcome you to watch the event live on this page. Full video will be posted within 24 hours.
Mark Calabria, Cato Institute
Robert Couch, Bipartisan Policy Center
James Parrott, Formerly of the National Economic Council
David Stevens, Mortgage Bankers Association
Peter J. Wallison, AEI
Alex J. Pollock, AEI
For more information, please contact Emily Rapp at [email protected], 202.419.5212.
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Mark Calabria is director of financial regulation studies at the Cato Institute. Before joining Cato in 2009, he spent seven years as a member of the senior professional staff of the US Senate Committee on Banking, Housing, and Urban Affairs. In that position, he handled issues related to housing, mortgage finance, economics, banking, and insurance for Senator Richard Shelby (R-AL). During his service on Capitol Hill, Calabria drafted significant portions of the Housing and Economic Recovery Act of 2008, which established a new regulatory regime for government-sponsored enterprises. Before his service on Capitol Hill, Calabria served as deputy assistant secretary for regulatory affairs at the US Department of Housing and Urban Development. He has also held a variety of positions at Harvard University's Joint Center for Housing Studies, the National Association of Home Builders, and the National Association of Realtors. Calabria has also been a research associate with the US Census Bureau's Center for Economic Studies. He is a frequent contributor to the op-ed pages of the New York Post, National Review, and Investor’s Business Daily, and makes frequent appearances on CNBC, Bloomberg, Fox Business, BBC, and BNN.
Rob Couch is a member of the Banking and Financial Services, Real Estate, and Governmental Affairs practice groups at the law firm Bradley Arant Boult Cummings. He also serves as a commissioner on the Housing Commission of the Bipartisan Policy Center in Washington, DC. Couch served as general counsel of the US Department of Housing and Urban Development (HUD) from 2006 to 2008. Before his position with HUD, Couch served as president of the Government National Mortgage Association (Ginnie Mae). He was also a member of former president George W. Bush's Task Force on the Status of Puerto Rico. Couch’s first tour of duty in government was as a law clerk to Hon. Lewis F. Powell Jr., associate justice of the US Supreme Court. Couch has a wealth of private sector skills and experience. He currently serves as a director of Prospect Mortgage Co. in Sherman Oaks, CA, and as a director of American Capital Agency Corp. and American Capital Mortgage Investment Corp., both of Bethesda, MD. Before his government service, he was president and CEO of New South Federal Savings Bank in Birmingham, AL. An active member of the mortgage banking industry, Couch is a former chairman of the Mortgage Bankers Association of America. He is a certified public accountant (inactive) and a certified mortgage banker (master certificate).
James Parrott left the White House earlier this year, where he had spent several years as a senior adviser at the National Economic Council. In that role, he led the team of senior advisers charged with counseling the cabinet and president on housing issues. He was on point for developing the administration’s major housing policy positions; articulating and defending those positions with Congress, the press, and public; and counseling White House leadership on related communications and legislative strategy. Before his time in that position, he was counsel to Secretary Shaun Donovan at the US Department of Housing and Urban Development (HUD). In that role, he advised the secretary on policy, legislative, and communications issues; represented the secretary and the administration with Congress, the press, and public; and represented HUD on the team of senior advisers counseling the cabinet and president. Before his time in government, he was a civil litigator, focusing on complex civil litigation and regulatory enforcement matters.
Alex J. Pollock joined AEI in 2004 after 35 years in banking. He was formerly president and CEO of the Federal Home Loan Bank of Chicago from 1991 to 2004. He is the author of numerous articles on financial systems and the organizer of the Deflating Bubble series of AEI conferences. In 2007, he developed a one-page mortgage form to help borrowers understand their mortgage obligations. At AEI, he focuses on financial policy issues, including housing finance, government-sponsored enterprises, retirement finance, corporate governance, accounting standards, and the banking system. He is the lead director of CME Group, a director of Great Lakes Higher Education Corporation and the International Union for Housing Finance, and chairman of the board of the Great Books Foundation.
David Stevens is president and CEO of the Mortgage Bankers Association (MBA). Before assuming this position, Stevens served as assistant secretary for housing and federal housing commissioner at the US Department of Housing and Urban Development (HUD). Stevens has more than 30 years of experience in mortgage finance, and has held several executive-level positions in sales, acquisition, investment, risk management, and regulatory oversight. He is well known throughout the industry and is often quoted in the media as a key housing influential, serving as an industry authority on major mortgage finance legislative and regulatory issues. He currently serves on the Hope Loan Port board of directors and on the board of the Mortgage Bankers Association (MBA) Opens Doors Foundation, MBA’s national 501(c) 3 nonprofit organization.
Peter J. Wallison holds the Arthur F. Burns Chair in Financial Policy Studies at AEI, where he codirects the program on financial market studies. He was also a cochair of the Pew Financial Reform Task Force and a member of the congressionally authorized Financial Crisis Inquiry Commission. Wallison previously practiced banking, corporate, and financial law at Gibson, Dunn & Crutcher LLP in New York and Washington, DC. In 1986 and 1987, Wallison was White House counsel to former president Ronald Reagan. From 1981 to 1985, he was general counsel of the US Department of the Treasury, where he played a significant role in the development of the Reagan administration's proposals for deregulation in the financial services industry. He also served as general counsel to the Depository Institutions Deregulation Committee and participated in the Treasury Department's efforts to deal with the debt held by less-developed countries. Between 1972 and 1976, Wallison was special assistant to former New York governor Nelson A. Rockefeller and, subsequently, counsel to John D. Rockefeller when he was vice president of the US.